Weekly Technical Repor -- April 30, 2015 :: HDFC Securities

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RETAIL RESEARCH Observation:  Week’s action formed another strong bear candle and this is the third consecutive week of selloff from the key resistance of 8850. The index has formed a three black crows formation which is bearish continuation formation.  Three consecutive weeks of selling has formed a bearish continuation formation and for the first time in the last 15 months index has formed two strong bearish monthly candles which is adding further strength to the bearish setup. One after another bearish confirmations are taking place; last week index has closed below 21 week EMA for the second time; now the 21 Week EMA is far away from the current levels. The index has validated the last month’s engulfing bear candle and closed well below the low. Index is moving in line with our expectations, it has attained our intermediate targets of 8270 – 8150 and is in progress for the next targets (We have been maintaining negative bias from 8850).  There is no change in the earlier view, so far price is sliding in impulse manner - either this falling leg could be combination of two impulse leg down or three impulse legs down as the chance of “wave y/c” is open. If it is “wave y” then two downward impulse legs are due and targets are placed around 7950 – 7750, if it is “wave c” then three downward impulse legs are due - in this case targets are placed around 7600 – 7500 in normal case.  Cycle degree wave count follows: The high of 9119 is some larger degree wave end. As per our preferred count Cycle degree “wave iii/C” has ended at 238.2% projection level of “wave i/A & wave ii/B”. The cycle degree “wave i/A” started from 4531 level and ended at 6229 and “wave ii/B” started from 6229 and ended at 5118. The dynamic “wave iii/C” started from 5118 and ended at 9119 with a couple of extensions. Though it was a little early to call 9119 as cycle degree top, theoretically we should confirm it only on a close below 8100 level but we confirmed it early (around 8850) as we had other technical validations to call 9119 as a major top (few weeks back we had given that validations). If index closes above 8650 then we have to consider the bullish alternates. Nifty Perspective Support Resistance 200 Day EMA Weekly Pick 8181.50 Bearish 7960 - 7800 8310 - 8505 8187 -----------

Daily Observation:  Day’s market action formed a bear candle with reasonable amount of lower shadow which indicates tug of war between bulls and bear.  Technically, index fell from the high and traded with high volatility due to derivatives expiry. Index is hovering around 200 Day EMA and attempting to move up but it fails to sustain at higher level as the trend remains down.  The earlier broken neckline of the H&S formation and 38.2% retracement level could act as a resistance and trend reversal level which is placed at 8310.  Though index has broken the 200 Day EMA it has not sustained at the lower levels and the A/D ratio is also not strongly supporting the bears so there could be a chance of bounce back for a day or two if index manages to surpass the level of 8230. However if index moves below 8145 then it could test 7950 in one to two days.  Trend wise index is continuing with its downtrend on both near and short term. Reversal levels are placed at 8335 & 8650 respectively. Overall the falling leg is subdividing and index is on the way down towards 7950 in near term and 7750 – 7600 in short term. If index closes above 8335 then this downside expectation could be postponed.  Elliot wave perspective; Now “wave y/c” down is in progress in which “wave c1/a & c2/b” has ended and “wave c3/c” has started for the target of 7950 – 7750 – 7600 which are 100%, 138.2% and 161.8% projection levels of “wave c1/a & c2/b”. The “wave c3/c” itself is sub diving into five wave decline, as per our preferred count on Monday index should not cross 8230 and it could fall vertically from the current level, if it not so then we have think about alternates.